Lower pump prices expected to bring more US holiday drivers

23 November 2011 21:32  [Source: ICIS news]

A US traffic jamHOUSTON (ICIS)--The recent drop in retail gasoline prices could buoy an increase in the number of US Thanksgiving Day holiday motorists, a market analyst said on Wednesday, but others predicted the shaky economy could dampen travel.

“Sentiment is that prices are lower than earlier this year, [despite] that they are much higher than last year, and that’s pushing people to view things positively, thus making little or few changes to their plans,” said analyst Patrick DeHaan with GasBuddy.com.

On 5 September, the US retail average for unleaded gasoline was $3.643/gal (€.71/litre), according to the US Energy Information Administration (EIA). On 21 November, the average price was $3.312/gal, a drop of 9.1%.

DeHaan said prices for the holiday would still be at least be 25-50 cents higher than any previous Thanksgiving, but the prices have slowly come down in the past couple of months.

In addition, recent headlines have brightened the US economic outlook, said analyst Stephen Schork, author of the Schork Report.

The past two weeks has shown US unemployment claims under 400,000, and the Consumer Price Index (CPI) for October was higher, indicating increased buying of retail items, including gasoline.

Schork also pointed out, however, that the MasterCard SpendingPulse has reported lower gasoline demand. For the week ended 4 November, gasoline demand was 8.665m bbl/day, according to the report, the lowest weekly demand since 9 September. The most recent report for the week of 22 November said retail gasoline demand fell 4.5% from the week of 15 November to 8.71m bbl/day.

“I am sceptical that we will see a rosy scenario,” said Schork, but he did not rule out an uptick in drivers from 2010.

Analyst Phil Flynn with PFGBest agreed that more travellers might be on the road this year compared with 2010, but his outlook for holiday travel is not especially optimistic.

“As far as the holiday season, there are not many people going to go over the river and through the woods,” said Flynn. “I think that’s reflective of the economy.”

The AAA, a US motorist group, projected travel for the 2011 Thanksgiving holiday at 4% higher than 2010. The organisation forecasted that 42.5m Americans would travel at least 50 miles from home for the holiday, compared with 40.9 miles in 2010.

“Driving AAA’s projected increase in the number of Thanksgiving travellers is pent-up demand from Americans who may have foregone holiday travel the last three years,” said vice president Bill Sutherland of AAA Travel Services. “As consumers weigh the fear of economic uncertainty and the desire to create lasting family memories this holiday, more Americans are expected to choose family and friends over frugality.”

The AAA predicted about 38.2m Americans would be driving during the Thanksgiving Day holidays.

The AAA said the current nationwide average price, as of 23 November, was $3.329/gal, more than 50 cents higher than last year. The average is almost 70 cents less than this year’s peak price of $3.98/gal on 5 May.

($1 = €0.74)

By: Sheena Martin
+1 713 525 2653

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